Delbert L. and Margaret J. Baker - Page 6

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          houses the administrative offices of AFVW, the dining room, and             
          apartment units.  This building is known as the Village West                
          Health Center and is also called the Commons building.  During              
          the years in issue, the Village West Health Center was available            
          for patient use by both residents of Village West (hereinafter              
          sometimes referred to as AFVW residents) and nonresidents of                
          Village West who lived in the surrounding community (hereinafter            
          referred to as noncontract patients).  Noncontract patients were            
          charged higher rates for use of the Village West Health Center              
          and certain services were billed to them on a fee-for-service               
          basis.                                                                      
                    1.   Independent Living Units                                     
               The ILU apartments, duplexes, and cottages are designed for            
          normal, everyday independent living of AFVW residents, and                  
          resemble regular residences that can be found in any                        
          nonretirement living community.  All ILUs are initially equipped            
          with miniblinds, wall-to-wall carpeting, and standard kitchen               
          appliances.  These are paid for by AFVW.                                    
               During 1997 and 1998, several amenities were available to              
          AFVW residents living in the ILUs, including:  (1) An emergency-            
          pull-cord system installed in each ILU; (2) complete building and           
          grounds maintenance; (3) weekly housekeeping services; (4) a 24-            
          hour front desk service; (5) access to a fitness center,                    
          available for medical therapy, with spa and exercise areas; (6)             






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